Fintech Update, 2/1 - 2/7
Hi! It’s Monday, February 8, 2021.
Leading Off
The UK’s FCA is pushing for new regulations governing BNPL businesses; Visa is piloting a new suite of crypto APIs; US lawmakers are considering how best to respond to the GameStop fiasco; PayPal announced another quarter of big earnings, while its Venmo subsidiary is expanding its product mix to include crypto; Payoneer is going public via SPAC; and Robinhood has now gained over $3B in fresh capital since halting trading on $GME last week. // All this + more below!
Quick Takes
FCA calls for BNPL regulation. The UK Financial Conduct Authority (FCA) is increasing its scrutiny of “buy now, pay later” (BNPL) businesses like Klarna. The FCA argues that many consumers don’t recognize BNPL as credit – or that the deals come with late payment fees – and therefore pose “significant potential for consumer harm.” The FCA is even going one step further, pushing for new financial regulations aimed at BNPL businesses “as a matter of urgency.” The popularity of BNPL products has quadrupled in the UK over the past year, with as many as 5 million people now using them in some form.
Will $GME result in new financial regulations? In a series of articles, digital news outlet Axios discussed possible governmental responses to ongoing market fluctuations stemming from the recent GameStop rally. Potential actions may include a crackdown on market manipulation, a financial transactions tax, and the abolition of “payment for order flow.” Treasury Secretary Janet Yellen convened financial regulators on Thursday to discuss the issue, while the House and Senate are planning hearings. Meanwhile, The Economist has produced a similar series of articles aimed at explaining the GameStop and Robinhood saga in depth, including: how technology is improving liquidity in markets; how r/WallStreetBets works; and how high-frequency traders are the market’s new intermediaries.
Venmo to add crypto, look more like a neobank. The PayPal-owned payments firm will begin allowing customers to buy, hold, and sell crypto tokens within the app later this year; and it also plans to roll out a suite of new features and integrations that will allow it to offer more traditional bank-like services, including savings and continued expansion of its credit product.
Visa partners with First Boulevard to pilot digital currency APIs. The global payments giant announced a partnership with the neobank, which is focused on financial empowerment in the Black community, to test the new APIs. The effort is part of Visa’s broader digital currency strategy, with the goal of enabling financial institutions without crypto infrastructure to offer such products through Visa.
PayPal crushes earnings… again. In its first earnings report since offering crypto trading last year, the payments giant announced yet another historic quarter, gaining 16 million in net new active accounts and handling $277 billion in total payment volume.
Payoneer goes public via SPAC listing. The New York-based startup, which facilitates cross-border payments, is going public via a SPAC led by Bancorp founder Betsy Cohen. The merger values Payoneer at $3.3B. Payoneer is the fourth such listing Cohen has undertaken, starting with a 2015 transaction.
Barclays offers digital receipts, powered by Flux. The British bank’s mobile app will now offer itemized digital receipts, the result of a lengthy pilot in partnership with Flux, a London fintech that has built a technology platform for banks and merchants. Barclays took a minority stake in Flux in 2018.
Gemini launches Gemini Earn. Crypto exchange Gemini launched an interest-bearing cryptocurrency account, which offers a market-beating APY of 7.4% (for certain coins) on a user's crypto holdings.
Pop Flies
Robinhood raised $3.4 billion in new funding to improve its liquidity and capacity; the total value includes the $1 billion emergency line of credit Robinhood gained from investors last week.
RBC is moving into the BNPL market.
Chime reached 12 million users!
The New York Times profiled retail investors who lost out on GameStop. . .
. . . and published a spotlight on Esusu’s founder, Wemimo Abbey.
Fundings!
Real estate platform Divvy Homes raised $110 million in a Series C funding round led by Tiger Global Management.
Digital banking solution provider Narmi raised a $20.4 million Series A funding.
Cloud-based construction lending software provider Built Technologies raised $88 million in Series C funding.
Investing and banking platform Stash raised $125 million in Series G funding.
Digital checkout platform Balance raised $5.5 million in a seed funding round which included Stripe and Nellie Levchin.
Indonesian financial wellness platform GajiGesa raised $2.5 million in seed funding.
Anonymously led fintech Million raised $3 million in seed funding.
Quantifind, provider of financial crimes investigation automation, raised $22 million in growth financing.
Mexican consumer trading platform Flink raised $12 million in Series A funding.